Evolution Mining Ltd Share Price Up on Record Profits (ASX:EVN)

The pandemic has hit plenty of industries so far, yet one area that’s doing well from all the uncertainty is gold.

You see, gold is seen as a safe haven and gold’s prices usually increase at a time of fear. This time around, gold hasn’t disappointed either. Gold spot prices in US dollars have returned close to 27% this year, even after suffering a major drop this week.

One of the companies that’s benefitted from higher gold prices is Australian gold miner Evolution Mining Ltd [ASX:EVN].

The company owns four mines in Australia: Cowal, Mt Carlton, Mt Rawdon and Mungari. They also own Red Lake in Canada and have an economic interest in the Ernest Henry copper-gold mine in Queensland.

Evolution reports record profits

Evolution released their FY20 results today.

The reported a record statutory net profit after tax of $301.6 million, a 38% increase from last year. Even when gold production was 746,463, lower than the 753,001 ounces it produced last year.

Evolution’s production guidance for FY21 is 670,000–730,000 ounces. Yet this is set to increase to 790,000–850,000 ounces by FY23, with growth coming from Cowal and Red Lake.

As Evolution’s Executive Chairman Jake Klein said:

FY20 was a great year for Evolution with a strong improvement in safety and sustainability performance, record underlying net profit, record free cash flow generation and record dividends. Through our continued focus on upgrading the quality of our asset portfolio, we expect to deliver exciting organic growth in the coming years mainly driven by Cowal and Red Lake.

Evolution’s strategy is to have six-eight assets with an average mine life of at least 10 years. Acquiring Red Lake last year was in line with this strategy as the mine has a 13-year mine life.

Evolution also announced today that Red Lake’s mineral resource is 48.08 million tonnes at 7.10 grams per tonne for 11 million ounces of gold. This is much higher than the initial estimate Evolution provided while completing due diligence for the purchase.

Record results pushed Evolution shares higher today

The EVN share price is up by 3.8% at time of writing, with shares trading at $5.97. Since the beginning of the year, Evolution’s share price has increased by 53% so far.

Evolution will be paying a fully franked final dividend of $9 cents per share.

If you are interested in dividend plays you can check out our free report ‘Five Dividend Stocks set to Thrive in the Post-Pandemic Era’. You can access it here.


Selva Freigedo

Selva Freigedo is a research analyst for The Rum Rebellion.

Born in Argentina, her passion for economic analysis started at a young age. Her father was an economist for the Argentinean governments and the family used to discuss politics and economics at the dinner table.

Argentina is a country with an unusual economic history. Growing up there gave Selva first-hand experience on different economic phenomena such as hyperinflation, devaluation and debt default.

Selva has also lived in Brazil, Spain and the USA.

Back in 2000 she was living in the US as the dot com bubble popped…
And in 2008 she was in Spain as the property market exploded and then collapsed…

She has seen first-hand what happens when bubbles burst.

Selva joined Fat Tail Investment Research’s team in 2016, as an analyst. She now writes from her vantage point in Australia, where she settled in 2015.

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